Bonzo tutorial is a lending protocol learning resource for understanding liquidation risk

Bonzo tutorial is a borrowing-risk procedure for reading the health factor, identifying what moves it, and acting before liquidation eligibility. In Bonzo Finance, a position with a health factor below 1 becomes liquidatable. Open the Hedera dashboard, note the value before any borrow, withdrawal, or collateral change, review the projected result, sign only after choosing a buffer, and confirm the refreshed figure after settlement. Repaying debt or adding enabled collateral restores distance from the boundary.

The short version: It is a borrowing-risk procedure for checking health factor and deciding when to repay debt before a reading below 1 makes the position liquidatable.

Run the five-stage health check before signing

Five stages turn the Bonzo health check into a repeatable workflow: prepare, read, preview, execute, and verify the position.

Start in HashPack with the intended Hedera account selected and enough HBAR left for network fees. Hedera mainnet uses chain ID 295, a fixed identifier worth checking wherever the wallet exposes network details. Connect to Bonzo Finance, then match the account on the dashboard to the account in HashPack. In the Supplied and Borrowed panels, record the health factor, current loan-to-value ratio, liquidation loan-to-value ratio, each enabled collateral balance, and each debt balance. This snapshot prevents a different account or stale browser session from becoming the basis for the next decision.

Next, open the proposed action without signing. The Transaction overview presents its position impact for a borrow, repayment, supply, withdrawal, or collateral toggle. Compare that impact with the personal health-factor floor chosen for the collateral mix. A preview near 1 leaves almost no room for price movement or accrued interest.

After signing, wait for Hedera settlement, refresh the dashboard, and repeat the same reading. Match the new debt and collateral balances with the intended action. If the figures do not move as expected, stop the sequence before adding another transaction to the verified Hedera state.

Read the weighted collateral formula

Three values determine Bonzo's health factor: each collateral's HBAR value, its liquidation threshold, and the wallet's total HBAR-denominated borrow value.

Bonzo Finance applies the formula health factor = Σ(collateral value in HBAR × liquidation threshold) ÷ total borrows in HBAR. The summation covers only supplied assets enabled as collateral. Each asset contributes its own threshold, so a mixed position uses a value-weighted result rather than the threshold of the largest token balance. The denominator combines all outstanding debt in the same HBAR reference unit. One wallet therefore receives one aggregate health factor, even when it supplies HBAR and HBARX while borrowing USDC. If adjusted collateral stays unchanged and debt falls by 50%, the factor rises to 2× its prior reading.

The liquidation threshold differs from maximum LTV. Bonzo assigns both parameters per asset and updates them separately, so a saved percentage does not replace the values displayed by the Bonzo dashboard.

What health factor makes a Bonzo position liquidatable?

Below 1, the Bonzo health factor makes the entire borrowing position eligible for liquidation under the protocol's rules. A reading of 1 is the mathematical boundary where liquidation-adjusted collateral equals debt, not a target buffer. Values above 1 preserve some distance, but no universal margin fits every asset mix. HBAR, USDC, SAUCE, and other collateral markets carry different thresholds and price behavior. Choose the operating margin before borrowing, then treat a declining reading as an action signal rather than waiting for a health factor of 1.

Separate borrowing power from liquidation distance

Two limits describe different Bonzo decisions: maximum LTV controls new borrowing capacity, while liquidation LTV marks the collateral ratio where liquidation begins.

From a timing perspective, Bonzo's Loan Health Monitor divides an account into four regions: Safe, Warning, Danger, and Liquidation. Current LTV moves across those regions as oracle values and accrued interest change. The Danger region indicates the account has exceeded its borrowing limit, while the Liquidation region aligns with liquidation eligibility. Losing remaining borrow power therefore does not prove collateral liquidation has started.

Use maximum LTV as the entry constraint and weighted liquidation LTV as the risk boundary. Net APY describes aggregated supply earnings and borrowing costs; it does not measure collateral coverage. Incentive rewards also sit outside the health-factor formula until the user supplies an accepted asset and enables it as collateral. The controlling account metric remains liquidation LTV.

Choose repayment or added collateral

Two corrective actions raise the Bonzo health factor: reduce total debt through repayment, or increase the value of collateral enabled for borrowing.

Repayment changes the denominator directly. Open Borrowed, select the debt asset, enter a partial amount or Max, inspect Transaction overview, sign through HashPack, and refresh. A 100% repayment closes that specific debt balance if the wallet holds enough of the borrowed asset to cover accrued interest at execution. Partial repayment still improves the ratio because it lowers aggregate debt. Adding collateral changes the numerator only after Bonzo accepts the supply and treats the asset as collateral. A supplied asset with collateral disabled continues earning its supply yield, but contributes zero value to the health factor.

Five-condition decision checklist

• Repay when the borrowed asset already sits in HashPack and the debt denominator needs an immediate reduction.
• Supply more collateral only when Bonzo accepts deposits for that market and the asset qualifies as collateral.
• Leave an existing asset enabled when the current position still relies on its weighted collateral value.
• Reject a withdrawal whose transaction preview brings the health factor near the chosen operating floor.
• Use Max only after confirming the wallet covers the displayed debt and retains HBAR for the transaction fee.

By contrast, Bonzo's default relationship gives repayment a stronger health-factor impact than adding the same unadjusted collateral value. The decision still rests on wallet balances, market supply capacity, and the borrower's personal operating floor.

What happens after the health factor drops below 1?

Below 1, a Bonzo position becomes eligible for liquidation, and one liquidation repays no more than 50% of its outstanding debt.

A liquidator selects part of the debt, repays it, and receives the corresponding collateral value plus an asset-specific liquidation bonus. From the borrower's side, the transaction removes both debt and more collateral than the debt's equivalent value. Bonzo configures the bonus per collateral market, alongside LTV, liquidation threshold, reserve factor, supply cap, and borrow cap. Those asset parameters change independently, while the 50% close limit defines the maximum debt portion for one liquidation.

One completed liquidation does not promise a restored buffer. Relative prices continue moving, variable interest continues accruing, and the remaining collateral mix determines the recalculated factor. Eligibility follows the on-chain account state rather than the dashboard's color alone. If the updated value remains below 1, the position remains open to another liquidation transaction.

Verify the new state on Hedera

Two snapshots verify a Bonzo risk adjustment: the account immediately before execution and the refreshed account after Hedera reaches consensus.

Record the new health factor only after the dashboard reflects the settled debt and collateral balances.

HashPack shows the signed transaction, while HashScan exposes the Hedera consensus result and token transfers. Raw data uses fixed representations: 1 HBAR equals 100,000,000 tinybars, and an EVM contract identifier occupies 20 bytes. Match the full account and contract identifiers before attributing a transfer to Bonzo Finance. On a delayed interface, confirm the first transaction before resubmitting it because a duplicate repayment changes exposure again. Bonzo's transaction history and the Hedera consensus result provide two execution records; the refreshed dashboard supplies the final health factor.

Trace the price paths behind sudden changes

Two oracle systems support Bonzo valuations on Hedera: Chainlink handles HBAR and USDC feeds, while Supra covers several ecosystem asset pairs.

Two price directions reduce health factor: collateral loses value against the reference unit, or borrowed assets gain value against it. Chainlink's configured feeds cover HBAR and USDC. Supra feeds include pairs involving HBARX, wHBAR, SAUCE, xSAUCE, DOVU, and other Hedera Token Service assets. Bonzo converts those readings into HBAR-denominated collateral and debt values before applying liquidation thresholds. A multi-asset wallet therefore moves as one combined account even when only one token price changes.

A SaucerSwap spot quote does not set Bonzo's collateral valuation. The lending contracts use their configured oracle path, so an external market screen and the dashboard may move at different moments. Base the intervention on Bonzo's refreshed health factor and configured oracle value.

Set a monitoring cadence around position changes

Three events deserve an immediate Bonzo health-factor check: new borrowing, lost collateral contribution, and a sharp relative price move between supplied and borrowed assets.

Accrued variable interest raises debt between user transactions, so unchanged token holdings do not guarantee an unchanged factor.

Automated monitoring should read the Bonzo Lend Data API's timestamp, health factor, current LTV, liquidation LTV, collateral balances, and debt balances as one snapshot. Handle three specified HTTP outcomes explicitly: 200 means success, 404 means the requested resource was not found, and 503 identifies an upstream mirror-node error. A 404 calls for checking the account input before retrying. A 503 calls for exponential backoff rather than treating the missing response as a healthy position. Never overwrite the last valid reading with an HTTP 503 response.

Match the method to the borrower

One wallet-level Bonzo health factor makes this method most useful for borrowers managing several collateral assets, several debts, or frequent position changes.

A supplier with 0 debt has no borrowing position to liquidate, even when supplied assets remain enabled as collateral. Once borrowing starts, the Aave v2-derived account model aggregates every enabled collateral contribution and outstanding debt. That aggregation suits disciplined monitoring because one repayment, withdrawal, or collateral toggle immediately changes the whole account rather than an isolated loan.

Borrowers using HBAR collateral for USDC debt need the process whenever prices or interest alter the ratio. External uses of borrowed funds, including SaucerSwap liquidity positions, do not enter Bonzo's collateral numerator. Applied this way, the Bonzo tutorial stays focused on the single account boundary that matters: a health factor of 1, which is walked through in Bonzo walkthrough.

Frequently asked questions about Bonzo tutorial

Last updated August 2026